State Loan Fuels Growth At Firm That Makes Software To Change With The Times

March 08, 2013|By MARA LEE maralee@courant.com, The Hartford Courant

AVON — Circle Commerce is a nice little business.

It employs 10 people in modest offices in an Avon office park. It receives a few million dollars a year from the 49 merchandisers that use its software to sell everything from books to stuffed bears to briefcases.

As President Frank Hanshaw told the governor earlier this year, "We're successful enough to stay alive but not really successful enough to grow."

In 1997, when the Y2K scare was convincing companies to upgrade systems, and e-commerce was bubbly, Circle Commerce had nearly twice as much revenue as it does now, and 16 people. But much of the time since its founding, it has employed about a half-dozen.

With Small Business Express, a program of grants and subsidized loans, Hanshaw trusts that Circle Commerce is poised for a more ambitious future.

A little more than a year ago, shortly before he applied for a $100,000 grant and a $250,000, four-year loan, Hanshaw found Dan McClutchy, who is now his chief development officer.

For the first year, there was no interest owed on the loan, and Hanshaw said revenue has already grown enough to justify the cost of borrowing. He said he expects sales growth of 25 percent to 30 percent by the end of the year.

In the old days, when Hanshaw would go to trade shows, he would come back with a handful of good leads. With McClutchy, they identified 35 leads at two shows last year. Two have become sales, while they are continuing to talk to many of the others. (Systems software sales have long lead times, like many substantial business investments.)

Just one of those potential clients could need $1 million annually in software licenses for its 300 year-round employees and 600 seasonal workers.

McClutchy said one potential customer, when he heard how Circle Commerce operates, literally dropped his folder in surprise. "Wait a minute, what you're telling me is revolutionary," McClutchy recalled him saying.

Circle's secret is that everything is customizable, at a moderate cost, even years after installation.

McClutchy said the software is written to be consistent across modules, in the same way that a team of speechwriters serves the president.

"They can understand what someone wrote five days ago, five weeks ago, five years ago," he said.

Hanshaw said he doesn't tend to hire professional programmers. "We have flat turned people away whose self-actualization is in writing cool code," he said.

Instead, he finds people who are problem solvers, who are Excel whizzes, and he trains them. Depending on how quick they are, they become proficient at coding for Circle Commerce within 45 days to six months, he said.

Bob Stetzel, vice president of information and e-commerce technology at Vermont Teddy Bear, said his company's reliance on Circle Commerce's software to fulfill orders long predates him. But what keeps them from switching is not just that it would cost a mint to replace it, or even that he thinks Circle Commerce's customer service is great.

He said he sticks with the product because it's "relatively easy to build off of a certain set of tools and add new features without having to redo the whole thing. You can build off the current system without major surgery."

When you add a new capability, it "doesn't create little Frankenstein monsters on the side," he said. While he said he would expect that from any software vendor, "it doesn't always happen."

Because many promise that level of functionality, but don't always deliver, Hanshaw said he has felt for decades his sales have been stymied by an "it's too good to be true" reaction.

"I'm probably over the sadness" by now, he said, but frustration remains. Many times, he said, companies felt their current systems were good enough, or they could continue to get by with QuickBooks.

With McClutchy's marketing expertise and energy, Hanshaw's beginning to believe he can find enough new clients in both order management systems and enterprise resource planning (ERP) systems that the company will need 25, 60 — even 100 employees. Scaling up to 30 people "isn't going to be a problem," Hanshaw said, but there might need to be a pause of a year or two to absorb the new people into the culture and develop them so they could manage teams of newer coders to get bigger than that.

"You have to have people who will enforce the discipline," he said.

McClutchy said there are plenty of companies with dozens to hundreds of system users who are at their wits' end with their current software.

"Google ERP failures," he said. "People are out there spending huge sums of money, and it doesn't do what they need."